Monetary Policy

• Monetary Policy involves using interest rates to influence the levels of consumer spending and Aggregate Demand.
• In the UK the target of Monetary policy is to keep inflation within a target of CPI 2% +/-1
• UK Monetary Policy is set by the MPC of the Bank of England. They are independent in setting interest rates, but have to write a letter to chancellor if they fail to keep inflation within the target rate.

 

• Blog entries - UK Monetary Policy
• Effects of Raising Interest Rates in the UK
• Limitations of UK monetary Policy

See also:

• Inflation
• Fiscal Policy